Aditynath Tripathy, Bhubaneswar V. ITO, Bhubaneswar

ITA 230/CTK/2011

• Counselvise Citation: 23022114 RSA 2011
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 13-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 26-04-2011
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: C R DAS
• Keywords: Gift

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 230/CTC/2011 (ASSESSMENT YEAR 2005 - 06) DR. ADITYANATH TRIPATHY, PLOT NO.243, SAHEED NAGAR,BHUBANESWAR, PAN: AAFPT 8151 N. VERSUS INCOME - TAX OFFICER, WARD 2(2), BHUBANESWAR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI C.R.DAS, AR FOR THE RESPONDENT SHRI A.BHATTACHARJEE, DR DATE OF HEARING : 13.12.2011 DATE OF PRONOUNCEMENT : 16.12.2011 ORDER SHRI K.K.GUPTA , AM : THIS APPEAL BY THE ASSESSEE IS ON THE LEARNED CIT(A) HAVING CONFIRMED THE ADDITION OF 13 LAKHS IN THE HANDS OF THE ASSESSEE ON THE ASSESSEES INABILITY TO EXPLAIN THE NATURE OF GIFTS AND OTHER DETAILS RELEVANT TO ACCEPT THE SAME AS RETURNED BY THE ASSESSEE WHEN THE ASSESSING OFFICER IN H IS DETAIL ORDER HA S NOTED THAT THE SAME HAVE NOT BEEN DISCLOSED IN THE MANNER AS PER SECTION 285BA OF THE INCOME - TAX ACT,1961 AND INFORMATION AS PRESCRIBED IN RULE 114E OF THE I.T.RULES,1962. 2. THE BRIEF FACTS A S HAVE BEEN BROUGHT ON RECORD BY THE ASSESSING AUTHORITIES ARE THAT THE ASSESSEE IS A DOCTOR ALONG WITH HIS WIFE AND HAS A MINOR DAUGHTER IN WHOSE NAME MUTUAL FUNDS WERE INVESTED AMOUNTING TO 13 LAKHS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS OF THE SOURCE OF THE INVESTMENT IN THE NAME OF THE MINOR DAUGHTER OF THE ASSESSEE. THE ASSESSEE EXPLAINED THE GIFTS HAVING BEEN RECEIVED FROM CLOSE RE LATIVES INCLUDING THE ASSESSEES WIFE WHEN ONE OF THE THEM RENDERED THE HOLDING OF MUTUAL FUNDS IN THE NAME OF THE MINOR DAUGHTER UNDER THE PROVISIONS OF SECTION 64 OF THE INCOME - TAX ACT,1961. THE ASSESSING OFFICER NEGATED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEES MINOR DAUGHTER COULD NOT EXPLAIN THE GIFTS RECEIVED HER ITA NO.230/CTC/2011 2 SPECIFICALLY IN VIEW OF THE FACT THE ASSESSEE WAS REQUIRE D TO PROVIDE THE INFORMATION U/R.11 4E OF THE I.T.RULES,1962. AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE FIRST APPE LLATE AUTHORITY, WHO CONSIDERED THE ASSESSMENT ORDER AS COMPLETE IN ALL RESPECTS AND THEREFORE, HE HELD THAT THE ASSESSEE HAS ONLY EXPLAINED THE SOURCES OF GIFTS WITHOUT BRING ING ON RECORD THE SOURCE OF SOURCE THEREOF INSOFAR AS IT WAS HELD IN THE NAME OF THE MINOR DAUGHTER. HE CONFIRMED THE AMOUNT OF 13 LAKHS WHICH AMOUNT HA S BEEN S P LIT AS EXPLAINED BY THE ASSESSEE AS DONATIONS FROM CLOSE RELATVES AS NOTED BELOW. GIFT FROM SELF (FATER OF ANUSKA) 2,60,000 GIFT FROM MR.NIBHA PADHI (MOTHER OF ANUSKA) 3,00,000 GIFT FROM ANUSKAS GRAND MOTHER 2,0 0,000 GIFT FROM ANUSKAS MT.GRAND FATHER 2,00,000 GIFT FROM ANUSKAS NMAT.GRAND MOTHER 1,00,000 GIFT FROM GUESTS ON HER BIRTHDAYS 2,49,750 TOTAL: 13,09,750 3. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING H IS ARGUMENT S SU BMITTED THAT THE AUTHORITIES BELOW HAVE NOT CONSIDERED THE ISSUE I N ITS ENTIRETY INSOFAR AS IT WAS EXPLAINED TO THE ASSESSING OFFICER THAT THE AMOUNTS HAVE BEEN RECEIVED ON VARIOUS OCCASIONS FOR INVESTMENT IN THE MUTUAL FUNDS TOTALLING 13 LAKHS WERE ROUT ED THROUGH THE BANK ACCOUNTS OF THE MOTHER AND FATHER OF THE MINOR DAUGHTER WHEN THE ASSESSING OFFICER INSISTED ON THE SAME TO HAVE BEEN FURNISHED BY WAY OF AN ANNUAL RETURN AS PRESCRIBED IN SECTION 285BA READ WITH RULE 114E. HE SUBMITTED THAT THE SAME APP LIES TO A BANKING COMPANY WHO HAS TO FURNISH THE DETAILS AND NOT THE ASSESSEE WHO WAS TO INDICATE THE AMOUNT INVESTED IN THE NAME OF THE MINOR DAUGHTER WHEN THE SAME WAS SUBMITTED AS HELD BY THE ASSESSEE BEING GUARDIAN UNDER THE PROVISIONS OF SECTION 64 OF THE I.T.ACT. FOR THE PURPOSE THAT THE AMOUNT HAD BEEN EXPLAINED TO HAVE BEEN INVESTED THROUGH THE BANKING CHANNELS WAS NOT ITA NO.230/CTC/2011 3 TO BE FURTHER VERIFIED BY HIM IN VIEW OF THE FACT THAT THE ASSESSEE HAD SUBMITTED THE CREDITWORTHINESS OF HIS WIFE AND HIMSELF HAVIN G PAN HOLDING AND WERE ASSESSED BY THE SAME ASSESSING OFFICER. THE ASSESSING OFFICER THEREFORE MISDIRECTED HIMSELF TO CREATE A BIA S THAT THE ASSESSEE HAS NOT FURNISHED THE ANNUAL INFORMATION RETURN ON THE PREMISE THAT THE ASSESSEE WAS HOLD ING A PAN AND NO T THE ANNUAL RETURN NUMBER. THE ASSESSEE WAS THEREFORE ONLY TO EXPLAIN THE AMOUNTS INVESTED THROUGH THE BANK WHICH COPIES OF THE BANK STATEMENTS ARE SUBMITTED IN THE PAPER BOOK PAGES 36 TO 37 INDICATING THAT THE HUSBAND AND WIFE TEAM HAD BALANCES TOTALLIG RS.10 LAKHS WHICH HAD BEEN INVESTED IN THE MUTUAL FUNDS DID NOT REQUIRE ANY FURTHER VERIFICATION. IT WAS NOT THE CASE OF THE ASSESSEE TO EXPLAIN THE REASON FOR OBTAINING THE GIFTS FROM THE CLOSELY HELD RELATIVES BEING THE PARENTS OF THE MINOR DAUGHTERS PA RENTS . THE ASSESSEE HAD ALSO INVESTED THE CASH GIFTS RECEIVED ON HER BIRTH DAYS AMOUNTING TO 2,49,750 WHICH THE PARENT U/S.64(3) WAS HOLDING ON HER BELIE F TO BE INVESTED IN THE MUTUAL FUNDS BY PURCHASING DEMAND DRAFTS. THEREFORE, UNDER NO CIRCUMSTANCES COULD THE INCOME OF 13 LAKHS BE ADDED AGAIN IN; THE HANDS OF THE ASSESSEE WHEN THE ASSESSEES WIFE ALSO CONTRIBUTED 7,50,000 FOR THE PURCHASE OF MUTUAL FUNDS. IT WAS NOBODYS CASE THAT THE MUTUAL FUND WAS TO BE DISCLOSED AS INVESTMENT IN THE HANDS OF THE MIN OR DAUGHTER SEPARATELY. SECTION 64 CLEARLY INDICATES THAT THE INCOME FROM WHICH WAS YET TO GENERATE WOULD BE THE INCOME OF THE INDIVIDUAL OF THE MINOR CHILD AS AND WHEN IT ARISES. THE GIFT TAX ACT HAVING BEEN REPEALED IN THE YEAR 200 0 CANNOT BE BROUGHT FOR CONSIDERATION WHILE THE ASSESSING OFFICER OR THE LEARNED CIT(A) HAS QUESTIONED THE INVESTMENT IN THE HANDS OF THE DONEE. 4. HE VEHEMENTLY ARGUED THAT A PERSON IS PAYING TAX FOR INVESTING HIS OWN MONEY WHEN THE SOURCE IS VERY CLEAR AND IS BEING HELD IN THE NAME OF THE MINOR DAUGHTER IN COMPLIANCE TO SECTION 64 CANNOT BE TAXED AGAIN AS ITA NO.230/CTC/2011 4 UNEXPLAINED IN THE HANDS OF THE MINOR DAUGHTER. THE ASSESSING OFFICER HAS ACCEPTED THE FACT THAT THE ASSESSEE HIMSELF I S RENDERING INCOME BELONGING TO THE MINOR DAUGHTER IN HI S OWN HANDS THEREFORE CANNOT BE A GROUND FOR DECLINING THE GIFTS WHICH IS ONLY A NAME GIVEN TO THE AMOUNTS AVAILABLE FOR PURCHASE OF MUTUAL FUNDS. HE SUBMITTED THAT THE ASSESSING OFFICER HAS ACCEPTED THE INCOME FOR THE IMPUGNED ASSESSMENT Y EAR AT 4,19, 460 THEREFORE DID NOT REQUIRE THE ASSESSEE TO EXPLAIN THE RECEIPT OF GIF TS HELD IN CASH AMOUNTING TO 2,49,750 WHICH WAS USED FOR PURCHASE OF DEMAND DRAFT FOR INVESTMENT IN THE MUTUAL FUNDS. HE PRAYED THAT THE ENTIRE AMOUNT CONFIRMED BY TH E LEARNED CIT(A) FOR ADDITION IN THE HANDS OF THE ASSESSEE MAY KINDLY BE DIRECTED TO BE DELETED. 5. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE POINTED OUT THAT IT WAS NOT THE CASE OF THE ASSESSEE S INABILITY TO EXPLAIN THE SOURCE OF S OURCE BUT WAS ON THE PREMISE THAT THE SAME HAD NOT BEEN DECLARED AS PER THE PROVISIONS OF SECTION 285BA WHICH MAY KINDLY BE CONSIDERED. THE LEARNED CIT(A) THEREAFTER HELD THAT THE GIFTS WERE NOT GENUINE AS NO DETAILS WERE FILED NEITHER IN THE ASSESSMENT P ROCEEDINGS NOR THE APPELLATE PROCEEDINGS IN SUPPORT OF THE GIFTS. A MERE STATEMENT WAS NOT SUFFICIENT THEREFORE WAS RIGHTLY CONFIRMED BY THE LEARNED CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD . WE ALSO PERUS ED THE PAPER BOOK SUBMITTED BY THE ASSESSEE, WHEREIN THE BANK STATEMENT OF THE ASSESSEE AND HIS WIFE HAVE BEEN SUBMITTED INDICATING THE INVESTMENT OF 10 LAKHS ON THE BASIS OF FUNDS AVAILABLE FOR INVESTMENT OVER A PERIOD OF THE FINANCIAL YEAR IN MUTUAL FUNDS ON 29.9.2004. A SUM OF 10 LAKHS WAS TO BE EXPLAINED BY THE ASSESSEE AS HAVING BEEN INVESTED IN MUTUAL FUNDS WHICH SOURCE HAS BEEN EXPLAINED IN T HE FORM OF ASSESSEE HAVING FUNDS IN THE BANK ACCOUNT OF PAST SAVINGS AND THE ITA NO.230/CTC/2011 5 AMOUNTS CONTRIBUTED BY THE ASSESSEES PARENTS AND ASSESSEES WIFES PARENTS. THE ASSESSEE WAS THEREFORE ONLY TO EXPLAIN THE SOURCE OF THESE AMOUNTS LYING IN HIS BANK ACCOUNTS WAS SATISFACTORILY EXPLAINED AND THEREFORE DID NOT REQUIRE FURNISHING OF ANNUAL INFORMATION REPORT AS NOTED BY THE ASSESSING OFFICER. THE CASH GIFTS RECEIVED AT THE TIME OF BIRTH DAYS WERE CONVERTED IN DEMAND DRAFTS FOR PURCHASE WHEN ASSESSEE HIMSELF HAD DECLA RED INCOME OF 4,19,460 IN THE IMPUGNED ASSESSMENT YEAR. THIS CLEARLY INDICATES THAT THE AMOUNTS RECEIVED IN CASH WERE NOT TO BE IDENTIFIED FOR HAVING BEEN RECEIVED ON THE OCCASION OF THE MINOR DAUGHTERS BIRTH DAY. THE ASSESSEES EFFORTS ONLY TO IDENTIFY THE AMOUNTS LYING IN THE BANK ACCOUNT OF THE ASSESSEE AND HIS WIFE AS HAVING BEEN RECEIVED FROM HIS AND HER PARENTS FOR THE BENEFIT OF THE MINOR DAUGHTER WHEN THE ASSESSEE CHOSE TO INVEST THE SAME IN MUTUAL FUNDS WHICH INCOME HE WAS TO RENDER U/S.64. HAVI NG DISCLOSED THE CASH FLOW STATEMENT HOLDING THE MUTUAL FUNDS, IT WAS NOT THE CASE OF THE ASSESSING OFFICER ONLY TO INSIST ON ANNUAL INFORMATION REPORT AS PRESCRIBED IN RULE 114E AS THE ASSESSEE IS HOLDING A PAN AND WAS NOT OBLIGED TO FURNISH THE DETAILS O THERWISE. THE ASSESSING OFFICER THEREAFTER MISDIRECTED HIMSELF TO TAX THE SAME HAVING APPRECIATED THAT THE GIFTS ARE ACTUALLY THE MUTUAL FUNDS AVAILABLE TO THE ASSESSEE FROM THE FUNDS LYING IN THEIR BANK ACCOUNTS AND ALSO ON THE BASIS OF INCOME GENERATED I N THE IMPUGNED ASSESSMENT YEAR AND CASH WAS AVAILABLE FOR THE PURCHASE OF DEMAND DRAFTS. WE FIND FORCE IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT UNDER NO CIRCUMSTANCES THE MUTUAL FUNDS HELD BY THE ASSESSEE IN THE NAME OF THE MINOR DAUG HTER AMOUNTING TO 10 LAKHS CAN BE ADDED IN THE HANDS OF THE ASSESSEE AS HIS OWN INCOME AS THE HUSBAND AND WIFE BOTH HAVE BEEN ASSESSED BY THE ASSESSING OFFICER. THE REQUIREMENT TO IDENTIFYING THE GENUINENESS AND CREDITWORTHINESS WAS GLARING ON THE FACE O F THE RETURN DID ITA NO.230/CTC/2011 6 NOT REQUIRE FURTHER CALLING FOR ANNUAL INFORMATION RETURN. HOWEVER, ON THE ISSUE OF CONVERSION OF 3 LAKHS CASH INTO BANK DRAFT FOR PURCHASE OF MUTUAL FUNDS HAS NOT BEEN EXPLAINED IN THE MANNER IN COMPLIANCE TO THE PROVISIONS OF THE I.T.A CT. WE, THEREFORE, ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER IS REQUIRED TO AFFORD OPPORTUNITY TO THE ASSESSEE FOR EXPLAINING THE CONVERSION OF THE SUM OF 2,49,750 CASH RECEIVED ON THE OCCASION OF THE MINOR DAUGHTERS BIRTH DAY FOR CONTRIBUTI ON IN THE MUTUAL FUNDS INVESTMENT. THE SUM OF 10LAKHS AS INVESTED IN MUTUAL FUNDS IS DIRECTED TO BE DELETED AND THE SUM OF 3 LAKHS INVESTED IN THE MUTUAL FUNDS IS DIRECTED TO BE VERIFIED BY THE ASSESSING OFFICER ON THE BASIS OF ASSESSEES EXPLANATION A S MENTIONED ABOVE. THE ORDER OF THE LEARNED CIT(A) IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER ON THE LIMITED ISSUE AS INDICATED ABOVE I.E., FOR VERIFICATION OF THE INVESTMENT OF 3 LAKHS AFTER AFFORDING OPPORTUNITY TO T HE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 16.12.2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: DR. ADITYANATH TRIPATHY, PLOT NO.243, SAHEED NAGAR,BHUBANESWAR, 2. THE RESPONDENT: INCOME - TAX OFFICER, WARD 2(2), BHUBANESWAR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. G UARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.